Culture ROI

CultureXP – Blair | 6 min read  

Based on our research, there is no simple formula or algorithm that nails the ROI for Workplace Culture. If like me, this only fuels the fire to find the holy grail. A conversation that once would have kept me awake steering at the ceiling at 2 am is now one of my favourite themes for discussion with Executives and Boards. Curious to know why – please read on. 

I share a similar view to Tony Hsieh - CEO of Zappo’s on the ROI. An influential culture reduces employee burnout and churn. It leads to higher employee engagement and positively impacting the company bottom line. But as Tony reminds us, we focus on workplace culture because we know it matters, and it is just the right thing to do. Tony’s quote always brings a smile “Just because you can’t measure the ROI of something doesn’t mean you shouldn’t do it. What’s the ROI on hugging your mom?” I still remember the look on the Practitioners faces when I rocked this one out. At least I made them smile.  

Reminiscent of Luke Skywalker training with Yoda, my collaboration with the Practitioners provided a good benchmark for the type of conversations we may encounter with Leadership and Boards. They encouraged us at CultureXP to connect the dots between Strategy and Culture and to prove how Culture improves the bottom line.  It was a chat with long-time friend Michael Henderson – Corporate Anthropologist, Cultures at Work, who shared this gem. Research has identified that on average Culture has eight times more impact on your business results than the strategy itself. Getting to the point, if your Culture has flatlined or heading south, the projected ROI for your Business & IT initiatives geared to meet the growing complexity of IT will not be fully optimised. 

I share a sense of frustration that we do not have to look far to find underperforming Transformational Programs and Projects with eye-watering blow out costs. As a Leader, if you have struggled to build a case for investing in Culture based on the ROI, look back on past and current Programme and Project ROI statements. Better yet, seek out meaningful data that validates the realisation of the projected benefits for the programs and projects delivered. This may require some tough love, but we like a good hug. More often than not, this data provides all the justification needed and is the call to arms to get serious about investing in your People and Culture. 

Learning from our past, Ryan McCarty – Co-Founder of Culture of Good, challenged our thinking with the introduction of VOI - Value on Investment. The tough thing with the VOI - it is hard to quantify when a company goes out of its way to give back to employees, communities or spend extra time with a customer to make sure they feel connected and part of the company culture. Ryan says that while it is hard to quantify in dollars for usually the first 18 months, it is easy to see the positive effect on others. Shifting our thinking from ROI to VOI changes the vibe of the discussion. Knowing that creating moments that matter with acts of kindness to an employee, community or customer often stay with people forever – ask yourself this question. What VOI do you place for caring and growing your people and recognising and rewarding their efforts to make our company a great place to work? Ryan reminds us that the VOI will take care of the ROI naturally. It always does. I like Ryan’s thinking and believe the VOI, now more than ever, plays a significant part in the Culture investment formula.    

This may also explain why some companies do not focus as much as they should because the ROI can be 2-3 years down the line. If you are an Executive building your street cred on quick wins and shorter-term gigs, the Culture ROI discussion may not be for you. But if you want to be remembered in the eyes of your people and customers long after you leave the building, then a Culture chat over a long macchiato could turn out to be the best decision you make this year.   

I am genuinely excited about our advancement in the pursuit of the ROI holy grail. We may not be there yet, but in our search, we are leading the ROI and VOI conversations with a better range of measurements that encourage Leaders and Boards to build their Culture by choice not chance. Each company culture is unique, so the qualitative and quantitative measures put in place will vary. Here are some of our favs, and we would love you to share yours.  

Living the values – Simply ask yourself this question – did I see our values being lived this week? It is a question you can ask yourself, your leadership team, and your people. If you are not living the values, then you may not be making the best decisions for your people, customers, and company future. Please do not get all out of shape if people cannot recall the values. It merely brings home the need to invest in your People and Culture.          

Communication – Not to be confused with the Company Communication Strategy. Every Culture requires a common spoken language that covers your company’s just cause, values and inspires feelings, beliefs, and ultimately behaviour. Are employees able to safely communicate their thoughts and suggestions to leadership and are their voices are being heard and actioned.   

Innovation – This is closely related to communication because it comes down to whether employees can move ideas through the company and how open your company is to new ideas. 

Attraction rate - The math is simple. If your employees believe your company is a great place to work, they refer their friends and associates. I have found the best hires come from employee referrals – your best talent is helping to find people that they want to work with, have confidence in and in doing so, expanding the talent pool – what is not to love about this. My ideal is that referrals should make up at least 25% of the total hires. 

Attrition rate – This one is not as simple as it looks. No matter how awesome your company, people are going to leave. I may not like losing people, but if I know an employee is moving on to something more awesome and we have helped them to achieve this, then I feel I have made a difference. How we work with our people on their way out speaks volumes about the Company Culture and the VOI. The flipside is that if people are leaving because they are not engaged, or they are not living the values and behaviours, the Culture ROI investment may be priceless.   

Employee Engagement value – Our love for data sees us populating engagement calculators to model employee engagement value. The calculators bring the science element we crave, creates visibility and seriously, who does not love crunching data. There is a good chance that you may splatter your coffee on the laptop screen upon viewing the results.     

Thanks for reading my blog. Our world is better when we share, and I would love to hear your insights and stories. If you want to positively impact your company’s bottom line and create a great workplace, please get in touch, and let us make this a happening thing.